FXstreet.com (Barcelona) - After spending most of last week edging higher, the NZD rally was completely rebuffed Monday. The NZD/USD was knocked towards 0.7900 as Spanish debt worries whipped markets into a frenzy. According to the BNZ analyst team, “As the European rot slowly spreads, markets are now beginning to wonder if the Spanish sovereign will soon follow its banks and ask for a bailout.”
Meanwhile, soaring government borrowing costs are starting to spill over from Spain to Italy, reigniting contagion fears. Of course, all of this is occurring against a backdrop of slowing global growth. There are several indicators scheduled to be released this week and investors can get another couple of important pointers via the form of preliminary Q2 GDP figures for the UK and US. “The NZD/USD, and risk sentiment more generally, remain highly sensitive to any downside surprises on global growth.” they add.
Still, a couple of factors are helping to prop up the kiwi, such as the NZD/EUR buying. This cross hit a fresh all-time high above 0.6550 last week, in line with analyst expectations. Furthermore, widening interest rate differentials against steady local interest rates, as well as falling global yields are helping to boost the relative yield appeal of the NZD.
Meanwhile, soaring government borrowing costs are starting to spill over from Spain to Italy, reigniting contagion fears. Of course, all of this is occurring against a backdrop of slowing global growth. There are several indicators scheduled to be released this week and investors can get another couple of important pointers via the form of preliminary Q2 GDP figures for the UK and US. “The NZD/USD, and risk sentiment more generally, remain highly sensitive to any downside surprises on global growth.” they add.
Still, a couple of factors are helping to prop up the kiwi, such as the NZD/EUR buying. This cross hit a fresh all-time high above 0.6550 last week, in line with analyst expectations. Furthermore, widening interest rate differentials against steady local interest rates, as well as falling global yields are helping to boost the relative yield appeal of the NZD.
